SPA Conference: Panelists focus on growth theme with multibillion dollar ambitions

By Emma Trincal

New York, Nov. 12 - How to grow a relatively young industry to the size of the mutual fund or ETF markets? This was the main focus of the 9th annual structured investment autumn-expo 2013 distribution conference organized Tuesday by the Structured Products Association in New York.

"We believe the structured products industry is on the verge of a breakout. What do we need to do to get to the tipping point that indexes and mutual funds have reached? We need to take our industry from a $50 billion to a $500 billion a year industry. We aspire to get to our first trillion," said Keith Styrcula, chairman of the SPA in his opening comments.

Breaking news from an exchange backed up his comments about scale.

Nasdaq announced during the conference its initiative to open Nasdaq OMX's Mutual Fund Quotation Service (MFQS) for the pricing of structured notes and market-linked certificates of deposits, a move many panelists agreed should be a groundbreaking step in the direction of more transparency for issuers and investors.

In an exclusive interview with Prospect News, Styrcula stated: "We see our potential for growth as a hockey stick concept. There are a few things we need to do to get this hockey stick that ETFs have become. Over a few years, the ETF industry has turned into a multibillion dollar business. How do we get there? We need first of all more transparency; we also need a mainstream type of strategy and not esoteric, complicated, risky investments. ETFs are plain-vanilla. You know what you get.

"What structured investments do so well is to take these indexes and use them to provide investors with a different payout profile that is of value to them.

"Another type of progress we still need to make is in terms of a nomenclature. It's important to be able to compare products. We're still pushing in this direction even if we haven't seen a major breakthrough yet."

Some participants recommended that the industry borrow some of the methods successfully used in other corners of the financial industry, notably in the options industry with its Options Industry Council.

"We need some sort of literature that is industry-approved, FINRA-approved," said Styrcula. "The OIC is a phenomenal organization that provides valuable education. Why don't we have an OIC type of group? They spend a lot of money to train the wirehouses on how to use options."

The issue was raised by the comments of a broker in the audience, who said that when asked by his clients about where to find unbiased third-party information, such as white papers, he did not know where to refer them to.

"The OIC does a great job at putting together information and educational material for investors," Michael Iver, a former structurer and conference attendee as well as the founder of iVerit, said from the audience during the panel discussion.

"An OIC presentation has no brand, no name. It's a very independent group. If the industry is serious about getting independent information to investors, people have to pony up money - the buysiders, the sellsiders, the manufacturers, pretty much everyone - in order to fund something like this," he said.

Another growth factor already used by the mutual fund industry, Styrcula said, was to provide more information on performance.

"The mutual fund industry does it. They give one-year, three-year, five-year, year-to-date performance stats of a fund versus a benchmark, and they sell themselves on that. We don't do that."

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.